Possibility - Will the changing role of NOC’s affect how we are ope … - Kaj Hugo...

Will the changing role of NOC’s affect how we are ope ating in the f t e?operating in the future?

Kaj H. Fredriksen

2008 h hUTC 2008, 4th-5th June, Bergen

Presentation Overview

• FMC Technologies at a glance

• What the researchers are telling us

• FMC & NOC’s - The last 50 years

• FMC & NOC’s - Today

• FMC & NOC’s – The competitive environment

• SummarySummary

FMC Technologies at a Glance1884 1884 –– Bean Spray Pump CompanyBean Spray Pump Company

1920s1920s –– Food Machinery CompanyFood Machinery Company1920s 1920s –– Food Machinery CompanyFood Machinery Company

FMC Technologies at a Glance

DefenceDefence GoldGold ChemicalsChemicals

EnergyEnergyAgricultureAgriculture

Aircraft Handling Aircraft Handling SystemsSystems

Food Food ProcessingProcessing

FMC Technologies at a Glance2007 Revenue: $4.6 Billion

Energy Production Segment

• Subsea Trees & Controls

2007 Revenue: $4.6 Billion

• Subsea Manifolds

• Subsea Processing Systems

• Surface Wellheads

Energy Systems

79%

• Surface Wellheads

Energy Processing Segment

• Fluid Control

• Loading Systems

• Measurement Solutions

Airport Systems

8 %FoodTech

13 %

• Citrus Extractors• Loaders

Announced intention to spin-off Airport and FoodTech in mid-2008

• Freezing Systems

• Food Processing Systems

• Deicers

• Boarding Bridges

• RampSnake

5

p


1957 1957 –– FMC acquires Oil Centre Tools HoustonFMC acquires Oil Centre Tools Houston


BergenAnchorageKongsberg

DunfermlineEdmonton

Calgary

St. John’s

Halifax

Aberdeen

Sens

Bergen

Stavanger

AnchorageSt Petersburg

Houston

Villahermosa MaracaiboMuscatNouakchott

CairoAlgiers

Singapore

Villahermosa Maracaibo Lagos

Eq. Guinea

Luanda

Johor

JakartaPointe Noire

Abidjan

Rio De JaneiroMacae

Luanda

Perth

20072007 –– FMC strategically positioned to meet the needs of our customersFMC strategically positioned to meet the needs of our customers2007 2007 FMC strategically positioned to meet the needs of our customersFMC strategically positioned to meet the needs of our customers

The ResearchThe ResearchThe Research The Research A New Environment?A New Environment?

Research – the new environment

NOC Oil ReservesNOC Oil Reserves

11%6%

NOC Oil Reserves (Equity Access)

Full IOC

Oil Reserves Held by New Russian Companies

<25% of Oil AccessibleWW Proven Oil Reserves:

1,148 bill. bbl11%6%

NOC Oil Reserves (Equity Access)

Full IOC

Oil Reserves Held by New Russian Companies

<25% of Oil AccessibleWW Proven Oil Reserves:

1,148 bill. bbl11%6%6%

Full IOC Access

11%6%6%

Full IOC Access

77%NOC Oil Reserves

(Limited Equity Access)

77%NOC Oil Reserves

(Limited Equity Access)(Limited Equity Access)(Limited Equity Access)

Source: Robin West, PFC Energy ”The service industry in a time of change”, presentation, 20 April 2006


Source of comment : Anon, Accenture, ”the national oil company – transforming the

“a buoyant oil price has removed the need for “a buoyant oil price has removed the need for external financing of some major projects”external financing of some major projects”

, , p y gcompetitive landscape for global energy”, p2, 2006


“NOC national goals:“NOC national goals:••Wealth creation for the nationWealth creation for the nation••Industrialisation and economic development”Industrialisation and economic development”••Industrialisation and economic developmentIndustrialisation and economic development

Source of comment : Amy Myers Jaffe Rice University ”The changing role of National OilSource of comment : Amy Myers Jaffe, Rice University The changing role of National Oil Companies in International Energy Markets” Presentation, March 1 2007


“the emerging role of service companies as “the emerging role of service companies as a pseudoa pseudo--substitute for IOC’s”substitute for IOC’s”

NOC IOCNOC IOC

Service Companies

Source of comment : Anon, Accenture, ” the national oil company – transforming the competitive landscape for global energy”, p9, 2006


FMC senior management meetingFMC senior management meeting October 2007October 2007FMC senior management meeting FMC senior management meeting –– October 2007October 2007


KongsbergKongsbergDunfermlineDunfermline

HoustonHouston

SingaporeSingaporeSingaporeSingapore

Rio De JaneiroRio De Janeiro


Metering & Control Systems

Light Well

Control Systems

Surface Well Systems Light Well

Intervention

Systems

Subsea Drilling Systems

Standard Subsea Trees

SubseaProcessing

Systems

Subsea Manifold

Trees

Guidelineless Deepwater Trees

Smart Well Control Systems Subsea Template

SystemsROV Tie-In Systems


National Oil Companies

C ti ” ” i t?Creating a ”new” environment?

oror

Creating a more competitive environment?

FMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesThe last 50 yearsThe last 50 years

FMC & NOC’s - The last 50 years

1957 - FMC Objectives:1957 - FMC Objectives:

Expand Internationally

Move into offshore sectorMove into offshore sector


**Restricted AccessRestricted Access

Rio De JaneiroRio De Janeiro

**19601960

high import tariffshigh import tariffs**high import tariffshigh import tariffs

FMC & NOC’s - The last 50 yearsy

1956 1956 –– CBV established in Santo Cristo CBV established in Santo Cristo -- RioRio

1960 1960

1960 1960 –– Signing of licence agreement Signing of licence agreement CBV & OTC (FMC) H tCBV & OTC (FMC) H t

Market entry Brazil Market entry Brazil thru thru

licence agreementlicence agreementCBV & OTC (FMC) HoustonCBV & OTC (FMC) Houston


CBV Surface Wellhead Brazil industry standardCBV Surface Wellhead Brazil industry standardCBV Surface Wellhead Brazil industry standardCBV Surface Wellhead Brazil industry standard


1974 1974 –– Petrobras make discovery in Campos basinPetrobras make discovery in Campos basin


1977 1977 –– First subsea tree for PetrobrasFirst subsea tree for PetrobrasEspada FieldEspada Field


After 38 years 1998 After 38 years 1998 –– FMC buys CBVFMC buys CBV

2007 2007 –– FMC CBV mainly localised positionsFMC CBV mainly localised positionsy py p


SingaporeSingapore

neutral hub neutral hub for for

Middle & Far EastMiddle & Far East


**

1980s 1980s –– MalaysiaMalaysiaPSCs PSCs -- Petronas manage procurement Petronas manage procurement

& service contracts& service contracts

P i it l l iP i it l l iPriority local companiesPriority local companies

30 years30 years –– Far EastFar East

19881988–– FMC Malaysia FMC Malaysia –– Pasir GudangPasir Gudang

30 years 30 years Far EastFar EastTransition Nationals to management Transition Nationals to management

positionspositions

1975 1975 –– FMC Singapore (key hub)FMC Singapore (key hub)

1975 to 1980s1975 to 1980s

19861986 FMC JakartaFMC Jakarta SantanaSantana

Market entry Far EastMarket entry Far Eastthruthru

local manufacturelocal manufacture19861986–– FMC Jakarta FMC Jakarta -- SantanaSantana


1975 1975 –– skilled Oil & Gas personnel scarceskilled Oil & Gas personnel scarceScarce resources command higher salariesScarce resources command higher salaries

AberdeenAberdeenHome of UK Home of UK Oil & Gas IndustryOil & Gas Industry

North Sea

1975 1975 –– FMC Dunfermline UK (key hub)FMC Dunfermline UK (key hub)

FMC & NOC’s - The last 50 yearstechnicianstechnicians labourerslabourers inspectorsinspectors

welderswelderstest engineerstest engineers machinistsmachinists

1975 1975 –– Scotland's central belt Scotland's central belt –– existing engineering and manufacturing skillsexisting engineering and manufacturing skillsCosts approximately 11 5% lower than AberdeenCosts approximately 11 5% lower than AberdeenCosts approximately 11.5% lower than Aberdeen Costs approximately 11.5% lower than Aberdeen


19 years 19 years –– UKUKTransition UK personnel to Transition UK personnel to

management positionsmanagement positions

1975 1975 -- US Personnel US Personnel expatriated expatriated

to transfer technologies to UKto transfer technologies to UK

1985 1985 –– Dunfermline’s 1st subsea tree installedDunfermline’s 1st subsea tree installedPhillip’s Hewitt fieldPhillip’s Hewitt field

May 2007 May 2007 UK Prime Minister Gordon Brown UK Prime Minister Gordon Brown

Talks with apprenticesTalks with apprentices1975 Market entry UK1975 Market entry UK

thruthruexisting industrial baseexisting industrial basegg


K b NK b NKongsberg NorwayKongsberg Norway

1987 Market Entry Norway1987 Market Entry Norway –– Alliance / JV with indigenous companyAlliance / JV with indigenous company1987 Market Entry Norway 1987 Market Entry Norway –– Alliance / JV with indigenous companyAlliance / JV with indigenous company


1972 to 1994 1972 to 1994 –– Norway’s local content policyNorway’s local content policy

Preference to Norwegian suppliersPreference to Norwegian suppliers

Must be competitiveMust be competitive

Research CoResearch Co--operation Incentivesoperation Incentives

Knowledge Transfer IncentivesKnowledge Transfer Incentives

1972 to 1994 1972 to 1994 –– Norwegian content essential to operate in NorwayNorwegian content essential to operate in Norway


**1987 FMC & kongsberg 1987 FMC & kongsberg

alliancealliance

System capabilitySystem capability

**XX--Mas treesMas trees**Topside controlsTopside controls**TieTie--in systemsin systems

y p yy p y

**HIPPSHIPPS

**ManifoldsManifolds

**WellheadsWellheads

1994 FMC kongsberg1994 FMC kongsberg

**Subsea controlsSubsea controls**manifoldsmanifolds

**WellheadsWellheads

**1994 FMC kongsberg 1994 FMC kongsberg Subsea A.SSubsea A.S

**Knowledge transfer & Knowledge transfer & hh titi**5K5K **15K15K

research coresearch co--operationoperation5K5K

FMC & NOC’s - The last 50 years1994 1994 –– Statoil’s 5 year subsea supply & service agreementStatoil’s 5 year subsea supply & service agreement

1994 Statoil1994 Statoil -- a contributor to our standardisation of technologya contributor to our standardisation of technology1994 Statoil 1994 Statoil a contributor to our standardisation of technologya contributor to our standardisation of technology

FMC & NOC’s - The last 50 years**UKUK **NorwayNorway**UKUK

**

1995 to 1997 1995 to 1997 UK technicians train & UK technicians train & supervise Norwegian supervise Norwegian

t h i i t blt h i i t bltechnician to assemble technician to assemble & test completions& test completions

**X/Mas TreeX/Mas Tree

Kongsberg

Dunfermline**Tubing HangerTubing Hanger

**Technology transfer to Technology transfer to NorwayNorway

**Tree CapTree Cap **Final Assembly and testFinal Assembly and test

FMC & NOC’s - The last 50 years**Improved Oil Recovery Technologies Improved Oil Recovery Technologies –– Game Changing InnovationsGame Changing Innovations

**Statoil TordisStatoil Tordis

Subsea ProcessingSubsea Processing**Subsea Processing Subsea Processing TechnologiesTechnologies

**Light well intervention Light well intervention **ggtechnologiestechnologies

**Thru Tubing Rotary DrillingThru Tubing Rotary Drilling

**2000 Statoil 2000 Statoil –– A driver behind our future technologiesA driver behind our future technologies

FMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesTodayToday

FMC & NOC’s - TodayIncreases with

Min

**Today New Frontiers bring New ChallengesToday New Frontiers bring New Challenges

Current Minimum

Increases withMauritania

EG

**Today New Frontiers bring New ChallengesToday New Frontiers bring New Challenges

Execution support Ivory Coast

Libya

Current Maximumy

Egypt

C

Manifold + Suction Anchors + Guidebases + Xmas Tree Assembly

Congo

Angolay

Industrial CapabilityLead Time

Nigeria

S th Af iLead TimeProjects/Well Count

South AfricaMax

**Policy Induced Resource Scarcity ?Policy Induced Resource Scarcity ?**Policy Induced Resource Scarcity ?Policy Induced Resource Scarcity ?

FMC & NOC’s - Today**Since 1999 FMC invested US $18m in AngolaSince 1999 FMC invested US $18m in Angola

**FMC Workshops / Office / Storage FMC Workshops / Office / Storage –– 18,588m218,588m2

**Sonangol driverSonangol driver -- maximise local contentmaximise local content

**Developing Angolese EmployeesDeveloping Angolese Employees**Developing Angolese manufactureDeveloping Angolese manufacture

**Sonangol driver Sonangol driver -- maximise local contentmaximise local content

FMC & NOC’s - Today

180

200**FMC Angola EmployeesFMC Angola Employees

140

160

**Original commitmentOriginal commitment44 Angolans 44 Angolans -- 20062006**2006 2006 -- Expatriate to Angolan ratio 70% (original target 60%)Expatriate to Angolan ratio 70% (original target 60%)

80

100

120

A l

Total

40

60

Angolans

Expats

0

20

1999 2000 2001 2002 2003 2004 2005 2006

Expats

**2013 Goal 2013 Goal –– 97% “localised” positions97% “localised” positions

**Sonangol driverSonangol driver -- maximise local contentmaximise local contentSonangol driver Sonangol driver maximise local contentmaximise local content

**Investing in Angolan ManufactureInvesting in Angolan Manufacturet **2005/62005/6

**Total Girassol / JasminTotal Girassol / Jasmin45 well development45 well development **Total RosaTotal Rosa

23 well development23 well development **BP Greater PlutoniaBP Greater Plutonia45 well development45 well development

cal C

onte

ntnt

ribut

ion

**2004/52004/5

**2005/62005/6

Loc

Co

**20002000

**Sonangol driverSonangol driver maximise local contentmaximise local content

**Jumper + manifold fabricationJumper + manifold fabrication+ PGB+ PGB**Jumper fabricationJumper fabrication

Investment in baseInvestment in base **Jumper + manifold fabricationJumper + manifold fabrication+ PGB + Xmas tree assembly+ PGB + Xmas tree assembly

**Sonangol driver Sonangol driver -- maximise local contentmaximise local content


**Final Assembly & testFinal Assembly & test

**Kits from UKKits from UK

**Modular “Kit Tree”Modular “Kit Tree”

**Final inspectionFinal inspection**Kits from USKits from USLuanda

Kits from USKits from US

**BP Greater Plutonia BP Greater Plutonia –– local content planlocal content plan

**Sonangol driver Sonangol driver -- maximise local contentmaximise local content**shipmentshipment**shipmentshipment

FMC & NOC’s - Today**6 months training Angola6 months training Angola

**recruitment & selectionrecruitment & selection

**9 to 12 months Training in Europe9 to 12 months Training in Europe**diplomasdiplomas


**1st BP tree assembled in Angola1st BP tree assembled in Angolagg

**2nd BP tree assembled in Angola2nd BP tree assembled in Angola**2nd BP tree assembled in Angola2nd BP tree assembled in Angola **2nd BP tree assembled in Angola 2nd BP tree assembled in Angola

installed at 1,400m on sea bedinstalled at 1,400m on sea bed**2nd BP tree assembled in Angola 2nd BP tree assembled in Angola pre installation checks on rigpre installation checks on rig

FMC & NOC’s - Today**Over time policies increase Over time policies increase

local content %local content %

**Manufacturing PGB,s Manufacturing PGB,s **Jumpers Jumpers

Angolan FabricatorsPetromar

**Manifold systems Manifold systems Mauritanian FabricatorsCOMECA

**Supplier development $ Supplier development $

PetromarSonamet

AlgoaFreidlander

COMECA**Limited resources Limited resources

**Limited capacity Limited capacity **

New / local subNew / local sub--suppliers suppliers require dedicated QA require dedicated QA

personnel to avoidpersonnel to avoidFreidlanderMetalurgica De Viana

**Policy created scarcity of resourcesPolicy created scarcity of resources Generally equipment costs increase 2 5 to 4 timesGenerally equipment costs increase 2 5 to 4 times

**Increase price $ Increase price $

personnel to avoid personnel to avoid compromising quality compromising quality

**Policy created scarcity of resources Policy created scarcity of resources -- Generally equipment costs increase 2.5 to 4 timesGenerally equipment costs increase 2.5 to 4 times


120

140**FMC Angola FMC Angola –– local staff turnoverlocal staff turnover

80

100

20

40

60

**Angola licence roundAngola licence round **Angola licence roundAngola licence round

0

Total Locals 16 22 45 62 57 57 95 119

Total Left 2 1 4 13 6 4 16 6

1999 2000 2001 2002 2003 2004 2005 2006

**Licence rounds Licence rounds

Loss of experienced staffLoss of experienced staff**higher salaries higher salaries **

IOC / NOCIOC / NOCsecuritysecurity

Duration of licence Duration of licence

Service companyService company**

Loss of experienced staff Loss of experienced staff to to

IOC’s & NOC’sIOC’s & NOC’s **job security job security **Service companyService company

securitysecurityduration of projectduration of project

**Without sustainable businessWithout sustainable business –– project specific service costs increaseproject specific service costs increaseWithout sustainable business Without sustainable business project specific service costs increaseproject specific service costs increase

FMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesFMC & National Oil CompaniesThe New EnvironmentThe New Environment

FMC & NOC’s – The new environment

**FMC Nusajaya MalaysiaFMC Nusajaya MalaysiaNew facility to support Petronas subsea business New facility to support Petronas subsea business

Approx 30 mins

**ExpansionExpansion

**ExistingExisting

**FMC SingaporeFMC Singapore**FMC SingaporeFMC SingaporeExpansion for growing NOC/ IOC subsea business in far East Expansion for growing NOC/ IOC subsea business in far East


**DrillingDrilling

**Avoiding Ice BergsAvoiding Ice Bergs

**InterventionsInterventions

**Gazprom Gazprom -- Technology studies for Shtokman and other Arctic offshore Technology studies for Shtokman and other Arctic offshore d l t i B t & Kd l t i B t & Kdevelopments in Barent & Kara seasdevelopments in Barent & Kara seas


**Offshore RussiaOffshore RussiaThe future is local contentThe future is local content

**September 2007September 2007**September 2007 September 2007 official opening of FMC Polytechnic Centreofficial opening of FMC Polytechnic Centre

Good advice from FMC’s director of salesGood advice from FMC’s director of sales

**Good advice from FMC s director of sales Good advice from FMC s director of sales

& business development& business development

“Study hard and you to can have a “Study hard and you to can have a business card like mine”business card like mine”**1st group of students commence 6 month 1st group of students commence 6 month

post graduate module in subsea technologypost graduate module in subsea technology

**2006 joint venture investment2006 joint venture investment FMC & St Petersburg Polytechnical UniversityFMC & St Petersburg Polytechnical University**2006 joint venture investment 2006 joint venture investment –– FMC & St Petersburg Polytechnical UniversityFMC & St Petersburg Polytechnical University

In SummaryIn Summary

**In SummaryIn Summary

FMC FMC SingaporeSingapore

**Technology Technology standardisationstandardisation **Improved oil Improved oil

recovery studiesrecovery studies**

FMC FMC PolytechnicPolytechnic

Opened RussiaOpened Russia

**11stst surface treesurface tree

**SingaporeSingaporeNeutral NOC Neutral NOC

locationlocation **FMC MalaysiaFMC Malaysia

Local Local manufacturing manufacturing

PetronasPetronas

FMCFMC E t bli hE t bli h**Technology Technology

studies Russiastudies Russia

**FMC Dunfermline FMC Dunfermline

UKUKExisting Existing

Manufacturing Manufacturing i f t ti f t t

**11stst Subsea Subsea tree UKtree UK

**FMC FMC buys buys KOSKOS

**EstablishEstablish

FMC AngolaFMC AngolaLocal contentLocal content

**Malaysia Malaysia subsea subsea facilityfacility

infrastructureinfrastructure

**11stst diverless treediverless tree

**FMC Kos FMC Kos alliancealliance

**11stst guideless treeguideless tree

**TechnologTechnology transfer y transfer to Norwayto Norway

**FMC Licence FMC Licence agreement agreement

CBVCBV**LWI LWI

implementationimplementation

**FMC buy OCTFMC buy OCT**

FMC IndonesiaFMC IndonesiaLocal manufacturing Local manufacturing

PetraminaPetramina

**FMC FMC buys buys CBVCBV**

Petrobras Petrobras discover oildiscover oil

Campos BasinCampos Basin

T h lT h lWorlds 1Worlds 1stst

bb

pp

1957 1961 1975 1982 1986 1988 19981994

**11stst FMC Subsea FMC Subsea treetree **11stst deepwater deepwater

recordrecord **11stst subsea subsea manifoldmanifold

20072000 2006

**TechnologTechnology transfer y transfer to Angolato Angola **

subsea subsea processing processing

system system installedinstalled

19601961

1974 1977 1985 1990 19951987 1999 2004 2007

In SummaryIn SummaryyyThe changing environment The changing environment

&& 1957 to 20071957 to 2007& & NOC policies NOC policies

Challenging / ManageableChallenging / Manageable

1957 to 20071957 to 200750 Years of experience!50 Years of experience!

Ready to tackle the futureReady to tackle the futureg g gg g g

FMC / NOCFMC / NOCtechnology studiestechnology studies

Service company / NOC Service company / NOC technology studiestechnology studiestechnology studiestechnology studies

A A mutually mutually beneficial relationshipbeneficial relationship

technology studiestechnology studies

Encourage all NOC’s.Encourage all NOC’s.Reserves are harder to findReserves are harder to findbeneficial relationshipbeneficial relationship

WARNING: WARNING: Good service companies are a limited resourceGood service companies are a limited resource

Thank youThank you

Possibility - Will the changing role of NOC’s affect how we are ope … - Kaj Hugo...

Documents

Transcript of Possibility - Will the changing role of NOC’s affect how we are ope … - Kaj Hugo...